Home  »  Company  »  Bombay Burmah  »  Quotes  »  Accounting Policy
Enter the first few characters of Company and click 'Go'

Accounting Policies of Bombay Burmah Trading Corporation Ltd. Company

Mar 31, 2016

A. Basis of Accounting:

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with generally accepted accounting principles in India (GAAP) and in compliance with the applicable accounting standards and provisions of the Companies Act, 2013 (here after referred to ''the Act''). The preparation of financial statements in conformity with GAAP requires that the management of the Corporation makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of fixed assets, provision for doubtful debts / advances, future obligations in respect of retirement benefit plans, etc. Difference between actual results and estimates are recognised in the period in which the results are known / materialise.

B. Current-non-current classification:

The Schedule III to the Act requires assets and liabilities to be classified either Current or Non-current.

a. An asset shall be classified as current when it satisfies any of the following criteria:

i) it is expected to be realized in, or is intended for sale or consumption in, the company''s normal operating cycle;

ii) it is held primarily for the purpose of being traded;

iii) it is expected to be realized within twelve months after the reporting date; or

iv) it is Cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date. Current assets include the current portion of non-current financial assets.

b. All assets other than current assets shall be classified as non-current.

c. A liability shall be classified as current when it satisfies any of the following criteria:

i) it is expected to be settled in the company''s normal operating cycle;

ii) it is held primarily for the purpose of being traded;

iii) it is due to be settled within twelve months after the reporting date; or

iv) the company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Current liabilities include the current portion of non-current financial liabilities.

d. All liabilities other than current liabilities shall be classified as non-current.

C. Method of Depreciation of Tangible Fixed Assets: Depreciation in respect of all tangible assets is provided on straight line method over the useful lives of assets based on the evaluation. Depreciation on such assets which are purchased / sold during the period is proportionately charged and for the assets acquired prior to 1st April, 2014, the carrying amount as on 1st April,

D. Valuation of Tangible Fixed Assets:

i) Fixed Assets are valued at cost of acquisition or construction. They are stated at historical costs or other amounts substituted for historical costs (vide note (ii) below). In respect of new projects pre-operative expenses including financing costs attributable to the acquisition / construction of fixed assets (net of income during trial run) upto the date of commencement of commercial production is included in cost.

ii) The Land and Building of the Auto electric component division as on 1st April, 2006 and the Plant and Machinery of South India Branches (Plantations) as on 30th September, 1985 other than additions during that year were revalued on the basis of the then present worth as per valuation made by the external valuers and are stated at revalued amounts. The resultant increase was credited to Revaluation Reserve on the respective dates.

iii) Expenditure in respect of new crops including cost of development is capitalised until the year of maturity of the Plantation.

iv) Fixed Assets held by non-integral foreign branches are stated at cost by converting at the closing rate of exchange at the balance sheet date.

E. Intangible Assets:

Intangible assets are recognised as per the criteria specified in Accounting Standard (AS 26) "Intangible Assets" as notified under section 133 of the Act read with Companies (Accounts) Rules, 2014.

Technical know-how fees for new product development is amortised over the period not exceeding fve years, of agreement with supplier of technology.

Goodwill represents the excess of costs of business acquired over the fair market value of net tangible and identifiable intangible assets.

Amortisation in respect of all the intangible assets is provided on straight line method over the useful lives of assets based on the evaluation and for the assets acquired prior to 1st April, 2014, the carrying amount as on 1st April, 2014 is amortised over the remaining useful life based on an evaluation. The useful life of such intangible assets is as follows:

* The Company believes the useful lives as given above best represent the useful life of these assets based on internal assessment where necessary, which is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.

F. Impairment of Assets:

Management evaluates at regular intervals, using external and internal sources whether there is an impairment of any asset. Impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its net realisable value on eventual disposal. Any loss on account of impairment is expensed as the excess of the carrying amount over the higher of the asset''s net realisable value or present value as determined.

G. Valuation of Investments:

i) Long Term Investments are shown at cost. However, when there is a decline, other than temporary, in the value of a long term investment, the carrying amount is reduced to recognise the decline.

ii) Current Investments are valued at cost or fair / market value whichever is lower.

iii) Long Term Investments include investments in shares of companies registered outside India. They are stated at cost by converting at the rate of exchange prevalent at the time of acquisition thereof, except in case of investment by non-integral foreign branches. Investments made by such foreign branches, are stated at cost by converting at the closing rate of exchange at the balance sheet date.

H. Employee Benefits:

a) Short term employee benefits:

Short term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

b) Post-employment benefits:

i) Provident and Family Pension Fund

The eligible employees of the Corporation are entitled to receive post employment benefits in respect of provident and family pension fund, in which the Corporation make monthly contributions at a specified percentage of the employees''eligible salary (currently 12% of employees''eligible salary). Employees contribute a minimum of 12%, the excess being voluntary contribution.

The contributions are made to the provident fund managed by the trust set up by the Corporation or to the Regional Provident Fund Commissioner (RPFC) which are charged to the Statement of Profit and Loss as incurred. The schemes are considered as defined contribution plan.

ii) Superannuation

The eligible employees of the Corporation are entitled to receive post employment benefits in respect of superannuation fund in which the Corporation makes annual contribution at a specified percentage of the employees''eligible salary. The contributions are made to the ICICI Prudential Life Insurance Co. Ltd. Superannuation is classified as Defned Contribution Plan as the Corporation has no further obligations beyond making the contribution. The Corporation''s contribution to Defned Contribution Plan is charged to statement of profit and loss as incurred.

iii) Gratuity

The Corporation has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees.

The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. The Corporation accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year. Actuarial gains and losses are recognised in the Statement of Profit and Loss.

c) Other Long-Term Employee Benefits – Compensated Absences:

The Corporation provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment / availment. The Corporation makes provision for compensated absences based on an independent actuarial valuation carried out at the end of the year. Actuarial gains and losses are recognised in the Statement of Profit and Loss.

I. Provisions, Contingent Liabilities And Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.

J. Valuation of Inventories:

i) Stores and spare parts are valued at lower of cost or net realisable value. Cost is calculated on weighted average basis.

ii) Raw materials are valued at lower of cost or net realisable value. The cost includes purchase price as well as incidental expenses and is calculated on weighted average basis.

iii) Tea stock is valued at cost or net realizable value whichever is lower and inclusive of cess on excise duty. Timber, coffee, pepper and cardamom in stock are valued at since realized / contracted rates or realizable value.

iv) Work-in-progress is valued at cost or net realisable value whichever is lower. Cost is arrived on the basis of absorption costing.

v) Manufactured finished goods of all divisions are valued at cost or net realisable value whichever is lower. Cost is determined on the basis of absorption costing including excise duty paid / provided on packed finished goods.

vi) Traded Finished goods of all divisions are valued at cost or net realisable value whichever is lower.

vii) Real Estate under development comprises of Freehold / Leasehold Land and Buildings at cost, converted from Fixed Assets into Stock-in -Trade and expenses related / attributable to the development / construction of the said properties. The same is valued at lower of cost or net realizable value.

K. Foreign Currency Transactions:

i) Foreign Branches: (Non-integral operations)

a) All assets and liabilities, both monetary and non-monetary are translated at the closing rate;

b) Income and expense items are translated at the average rate prevailing during the year; and

c) All resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment in the branch.

ii) Other Transactions:

a) Initial recognition:

Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

b) Conversion:

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

c) Exchange Differences:

The premium or discount arising at the inception of forward exchange contracts is amortised as expenses or income over the life of the respective contracts. The difference between year-end conversion rate and rate on the date of contract is recognized as exchange difference. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the year.

L. Export Benefts / Incentives:

Export benefits / incentives in respect of import duty benefits under DEPB scheme or Duty draw back scheme are accounted on accrual basis on the basis of exports made under the said schemes.

M. Revenue Recognition:

i) Revenue in respect of insurance / other claims, interest etc., is recognised only when it is reasonably certain that the ultimate collection will be made.

ii) Sale of products is recognised when the risks and rewards of ownership are passed on to the customers and no significant uncertainty as to its measurability and collectability exists.

iii) Sale of timber is accounted based on sale agreement/sale in auction.

iv) Sale of pepper is accounted based on confirmed contract of sale.

v) Dividend income is accounted when the right to receive payment is established and known. Interest income is recognised on the time proportion basis.

N. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related / attributed to the acquisition / construction of qualifying fixed assets are capitalised up to the date when such assets are ready for its intended use and all other borrowing costs are recognised as an expense in the period in which they are incurred.

O. Segment Accounting Policies:

a) Segment assets and liabilities:

All Segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment assets and liabilities do not include inter-corporate deposits, share capital, reserves and surplus, borrowings, and income tax (both current and deferred).

b) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to segment. It does not include interest income on inter-corporate deposits, interest expense and income tax.

P. Financial Derivatives and commodity hedging transactions:

Outstanding derivative contracts are not marked to market at each balance sheet date. The Corporation assesses the foreseeable losses in respect of such contracts and provision is made for such estimated losses, wherever necessary. Realized gains and losses on such contracts and interest costs in foreign currencies are accounted for at the time of settlement of the underlying transactions.

Q. Taxes on Income:

Income Taxes are accounted for in accordance with Accounting Standard (AS 22) - "Accounting for Taxes on Income", as notified under Section 133 of the Act read with read with Companies (Accounts) Rules, 2014. Income Tax comprises both current and deferred tax.

Current tax is measured on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using the substantively enacted tax rates and tax regulations as of the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation.

R. Earnings per Share:

The basic and diluted earnings per share (EPS) is computed by dividing Net Proft after tax for the year by weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless issued at a later date.

S. Leases:

i) Lease transactions entered into prior to 1st April, 2002:

a) Lease rentals in respect of assets acquired under lease are charged to Statement of Profit & Loss.

ii) Lease transactions entered into on or after 1st April, 2002:

a) Assets acquired under lease where the Corporation has substantially all the risks and rewards incidental to ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

b) Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors, are classified as operating leases. Lease rentals are charged to the Statement of Profit & Loss on accrual basis.

a) The Corporation has only one class of equity share having par value of Rs. 2/- (Previous Year Rs. 2/-) per share.

b) Each holder of equity shares is entitled to one vote per share.

c) The Corporation declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

d) During the year ended 31st March, 2016, the amount of per share dividend recognised as distributions to equity shareholders was Rs. 1/- (Previous Year Rs. 1/-) for every share of Rs. 2/- each.

The total dividend appropriation for the year ended 31st March, 2016 amounted to Rs. 839.78 lakhs (Previous Year Rs. 697.72 lakhs) including corporate dividend tax ofRs. 142.06 Lakhs (Previous Year Nil).

e) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(a) Rupee loan from HDFC Bank Limited of Rs. 3,000 Lakhs, - current outstanding - Rs. 2,250 Lakhs of which is repayable in 4 equal half yearly installments of Rs. 750 Lakhs each from 3rd March 2016 to 3rd September 2017. The loan is secured by extension of charge Equitable Mortgage by deposit of title deeds of Singampatti estates together with Buildings and structures thereon in favour of HDFC Bank Limited. The rate of interest on the loan is ranging from 9.1% to 10.5%.

(b) Rupee loan from Kotak Mahindra Bank Limited of Rs. 5,000 Lakhs, - current outstanding - Rs. 5,000 Lakhs of which Rs.1,500 lakhs is repayable in 8 equal quarterly installments of Rs.112.50 lakhs each, from 30th June, 2017 to 30th June, 2019 and 4 equal quarterly installments of Rs. 150 lakhs each, from 30th September, 2019 to 30th June, 2020; Rs. 3,500.00 lakhs is repayable in 8 equal quarterly installments of Rs. 262.50 lakhs each, from 30th September, 2017 to 31st March, 2019 and 4 equal quarterly installments of Rs. 350.00 lakhs each, from 30th June, 2019 to 31st March, 2020. The loan is secured by extension of charge of an Equitable Mortgage by deposit of title deeds of Akurdi Land together with Buildings and structures thereon in favour of Kotak Mahindra Bank Limited. The rate of interest on the loan is ranging from 9.1% to 11%.

(c) Rupee loan from The Hongkong and Shanghai Banking Corporation Limited of Rs. 2,500 Lakhs, - current outstanding - Rs. 2,000 Lakhs is repayable in 5 equal half yearly installments of Rs. 500 Lakhs each from 23rd December 2015 to 23rd December 2017.The loan is secured by extension of charge of an Equitable Mortgage by deposit of title deeds of Mudis estates together with Buildings and structures thereon in favour of said bank. The rate of interest on the loan is ranging from 9.1% to 10.5%.

(d) Rupee loan from The Federal Bank Limited of Rs. 2,500 Lakhs, - current outstanding - Rs. 2,197 Lakhs is repayable in 18 quarterly installments of Rs. 138.89 Lakhs each from September 2016 to December 2020.The loan is secured by extension of pari passu charge of an Equitable Mortgage by deposit of title deeds of Mudis estates together with Buildings and structures thereon in favour of said bank. The rate of interest on the loan is ranging from 9.1% to 10.5%.

(e) Loan against vehicles are secured by lien on vehicle purchased.

(a) Cash Credit from Axis Bank Limited of Rs. 2,868.72 Lakhs (Previous Year Rs. 895.20 Lakhs), is secured by hypothecation of present and future stocks, book debts and other current assets on pari-passu basis and a collateral on Elkhill Estates. The rate of interest on the loan is ranging from 11% to 13%.

(b) Cash Credit from HDFC Bank Limited of Rs. 1,825.93 Lakhs (Previous Year Rs. 1,960.27 Lakhs) is secured by hypothecation of present and future stocks, book debts and other current assets on pari-passu basis and a collateral on Singampatti Estates. The rate of interest on the loan is ranging from 11% to 13%.

(c) Short term loan and Agriculture loan from HDFC Bank Limited of Rs. 700 Lakhs (Previous Year Rs. Nil) and Rs. 361.13 Lakhs (Previous Year Rs. 253.99 Lakhs) is secured by hypothecation of present and future stocks, book debts and other current assets on pari-passu basis and a collateral on Singampatti Estates. The rate of interest on the loan is ranging from 9% to 11%.

(d) Packing Credit/ Cash Credit / WCDL from The Hongkong and Shanghai Banking Corporation Limited of Rs. 2,200.88 Lakhs (Previous Year Rs. 4,431.75) is secured by hypothecation of present and future stocks, book debts and other current assets on pari-passu basis and a collateral on Mudis Estates. The rate of interest on the loan is ranging from 9% to 11%.

(e) Packing credit from Federal Bank Limited of Rs. 2,788.45 Lakhs (Previous Year Rs. 232.25 Lakhs) is secured by hypothecation of present and future stocks, book debts and other current assets on pari-passu basis. The rate of interest on the loan is 6 Months LIBOR plus 1 %.

(f) Cash Credit/ Overdraft from Kotak Bank Limited of Rs. 442.10 Lakhs (Previous Year Rs. Nil) is secured by hypothecation of present and future stocks, book debts and other current assets on pari-passu basis. The rate of interest on the loan is ranging from 9% to 11%.

(g) Outstanding unsecured loan of Rs. 6,500.00 Lakhs (Previous YearRs.6,500 Lakhs) is payable to banks. The tenure of loan is short term and it is repayable on demand. The rate of interest on the loan is ranging from 9% to 11.5%.

(h) During last year the Corporation had obtained Inter Corporate Deposit of Rs. 4,000 Lakhs (Previous year Rs. 4,000 Lakhs) from Britannia Industries Limited (Subsidiary company) which carries interest @ 12%. It is unsecured and repayable on demand.


Mar 31, 2013

A. Basis of Accounting

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with generally accepted accounting principles in India (GAAP) and in compliance with the applicable accounting standards and provisions of the Companies Act, 1956.

The preparation of financial statements in conformity with GAAP requires that the management of the Corporation makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference between actual results and estimates are recognised in the period in which the results are known/materialise.

During the year ended 31 March, 2012 (effective 1 April 2011), revised Schedule VI notified under the Act has become applicable to the Company for preparation and presentation of its Financial Statements. The adoption of the revised Schedule VI does not impact recognisation and measurement principles followed for preparation of Financial Statements. All assets and liabilities have been classified as current and non-current as per the Company''s normal operating cycle and other criteria set out in the revised Schedule VI.

B. Method of Depreciation, Deletion and Amortisation of Tangible Fixed Assets:

(i) Depreciation on Fixed Assets is provided on Straight Line basis except on assets of Sunmica Division other than Plant & Machinery, and Moulds and Dies of Weighing Products Division, at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on Fixed Assets of Sunmica Division other than Plant & Machinery is provided on written down value basis at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on Moulds and Dies of Weighing Products Division is provided on straight line basis at the rate of 20% based on the useful life as estimated by the Corporation.

(ii) Depreciation on revalued assets of Sunmica Division, South India branches (Plantations) and Auto Ancillary division (erstwhile Electromags Automotive Products Private Limited) for the year have been calculated on the revalued cost on the basis of their expected future life as estimated by the valuers. The difference between depreciation on revalued cost and original cost has been withdrawn from Revaluation Reserve and credited to Statement of Profit and Loss.

(iii) Cost of Leasehold Land is amortised over the period of lease.

(iv) Assets costing less than Rs. 5000 are fully depreciated in the year of purchase.

(v) Auto ancillary division (erstwhile Electromags Automotive Products Private Limited) carries out at every year end, technical evaluation of the moulds and dies for revising the economic useful life/usability of the assets and based on which, it writes down the moulds and dies which are not usable due to change in models, customer order etc.

C. Valuation of Tangible Fixed Assets:

(i) Fixed Assets are valued at cost of acquisition or construction. They are stated at historical costs or other amounts substituted for historical costs (vide note (ii) below). In respect of new projects pre-operative expenses including financing costs attributable to the acquisition/construction of fixed assets (net of income during trial run) upto the date of commencement of commercial production is included in cost.

(ii) The Land and Building of the Auto-Ancillary division (erstwhile Electromags Automotive Products Private Limited) as on 1st April, 2006 and the Plant and Machinery of Electronics Division and South India Branches (Plantations) as on 30th September, 1985 other than additions during that year were revalued on the basis of the then present worth as per valuation made by the external valuers and are stated at revalued amounts. The resultant increase was credited to Revaluation Reserve on the respective dates.

(iii) Expenditure in respect of new crops including cost of development is capitalised until the year of maturity of the Plantation.

(iv) Fixed Assets held by non-integral foreign branches are stated at cost by converting at the closing rate of exchange at the balance sheet date.

D. Intangible Assets :

Intangible assets are recognised as per the criteria specified in Accounting Standard (AS 26) "Intangible Assets" as notified under the Companies (Accounting Standards) Rules, 2006 and amortized as follows:

(i) Technical Know How Fees

Technical know-how fees for new product development is amortised over the period not exceeding five years, of agreement with supplier of technology.

(ii) Goodwill

Goodwill represents the excess of costs of business acquired over the fair market value of net tangible and identifiable intangible assets.

Goodwill is amortised proportionately over the period not exceeding five years from the date of acquisition of the business.

(iii) Computer Software

In respect of auto ancillary division (erstwhile Electromags Automotive Products Private Limited), ERP related costs are amortised over a period of 5 years. For other divisions, computer software costs are amortised over the period not exceeding ten years based on the management''s estimate of its useful life.

E. Impairment of Assets:

Management evaluates at regular intervals, using external and internal sources whether there is an impairment of any asset. Impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its net realisable value on eventual disposal. Any loss on account of impairment is expensed as the excess of the carrying amount over the higher of the asset''s net realisable value or present value as determined.

F. Valuation of Investments:

(i) Long Term Investments are shown at cost. However, when there is a decline, other than temporary, in the value of a long term investment, the carrying amount is reduced to recognise the decline.

(ii) Current Investments are valued at cost or fair/market value whichever is lower.

(iii) Long Term Investments include investments in shares of companies registered outside India. They are stated at cost by converting at the rate of exchange prevalent at the time of acquisition thereof, except in case of investment by non-integral foreign branches. Investments made by such foreign branches, are stated at cost by converting at the closing rate of exchange at the balance sheet date.

G. Employee Benefits :

(a) Short term employee benefits:

Short term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

(b) Post-employment benefits:

(i) Provident and Family Pension Fund

The eligible employees of the Corporation are entitled to receive post employment benefits in respect of provident and family pension fund, in which the Corporation make monthly contributions at a specified percentage of the employees'' eligible salary (currently 12% of employees'' eligible salary). Employees contribute a minimum of 12%, the excess being voluntary contribution.

The contributions are made to the provident fund managed by the trust set up by the Corporation or to the Regional Provident Fund Commissioner (RPFC) which are charged to the Statement of Profit and Loss as incurred. The schemes are considered as defined contribution plan.

(ii) Superannuation

The eligible employees of the Corporation are entitled to receive post employment benefits in respect of superannuation fund in which the Corporation makes annual contribution at a specified percentage of the employees'' eligible salary. The contributions are made to the ICICI Prudential Life Insurance Co. Ltd. Superannuation is classified as Defined Contribution Plan as the Corporation has no further obligations beyond making the contribution. The Corporation''s contribution to Defined Contribution Plan is charged to statement of profit and loss as incurred.

(iii) Gratuity

The Corporation has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees.

The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. The Corporation accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year. Actuarial gains and losses are recognised in the Statement of Statement of Profit and Loss.

(c) Other Long-Term Employee Benefits - Compensated Absences:

The Corporation provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/ availment. The Corporation makes provision for compensated absences based on an independent actuarial valuation carried out at the end of the year. Actuarial gains and losses are recognised in the Statement of Profit and Loss.

H. Provisions, Contingent Liabilities And Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.

I. Valuation of Inventories:

(i) Stores and spare parts are valued at lower of cost or net realisable value. Cost is calculated on weighted average basis, except in the case of Sunmica Division, where it is on First in First out basis.

(ii) Raw materials are valued at lower of cost or net realisable value. The cost includes purchase price as well as incidental expenses and is calculated on weighted average basis, except in the case of Sunmica Division, where it is on First in First out basis.

(iii) Tea stock is valued at cost or net realizable value whichever is lower and inclusive of cess on excise duty. Timber, coffee, pepper and cardamom in stock are valued at since realized/ contracted rates or realizable value.

(iv) Work-in-progress is valued at cost or net realisable value whichever is lower. Cost is arrived on the basis of absorption costing.

(v) Manufactured finished goods of all divisions are valued at cost or net realisable value whichever is lower. Cost is determined on the basis of absorption costing including excise duty paid/ provided on packed finished goods.

(vi) Traded Finished goods of all divisions are valued at cost or net realisable value whichever is lower.

(vii) Real Estate under development comprises of Freehold/Leasehold Land and Buildings at cost, converted from Fixed Assets into Stock-in -Trade and expenses related/attributable to the development/construction of the said properties. The same is valued at lower of cost or net realizable value.

J. Foreign Currency Transactions:

(i) Foreign Branches: (Non-integral operations)

(a) All assets and liabilities, both monetary and non-monetary are translated at the closing rate;

(b) Income and expense items are translated at the average rate prevailing during the year; and

(c) All resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment in the branch.

(ii) Other Transactions:

(a) Initial recognition :

Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion :

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(c) Exchange Differences :

The premium or discount arising at the inception of forward exchange contracts is amortised as expenses or income over the life of the respective contracts. The difference between year-end conversion rate and rate on the date of contract is recognized as exchange difference. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the year.

K. Export Benefits/Incentives:

Export benefits/incentives in respect of import duty benefits under DEPB scheme are accounted on accrual basis on the basis of exports made under DEPB scheme.

L. Revenue Recognition:

(i) Revenue in respect of insurance/other claims, interest etc., is recognised only when it is reasonably certain that the ultimate collection will be made.

(ii) Sale of products is recognised when the risks and rewards of ownership are passed on to the customers and no significant uncertainty as to its measurability and collectability exists.

(iii) Sale of timber is accounted based on sale agreement/sale in auction.

(iv) Sale of pepper is accounted based on confirmed contract of sale.

(v) Dividend income is accounted when the right to receive payment is established and known. Interest income is recognised on the time proportion basis.

M. Borrowing Cost :

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalised up to the date when such assets are ready for its intended use and all other borrowing costs are recognised as an expense in the period in which they are incurred.

N. Segment Accounting Policies :

(a) Segment assets and liabilities :

All Segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment assets and liabilities do not include inter-corporate deposits, share capital, reserves and surplus, borrowings, and income tax (both current and deferred).

(b) Segment revenue and expenses :

Segment revenue and expenses are directly attributable to segment. It does not include interest income on inter-corporate deposits, interest expense and income tax.

O. Financial Derivatives and commodity hedging transactions:

Outstanding derivative contracts are not marked to market at each balance sheet date. The Corporation assesses the foreseeable losses in respect of such contracts and provision is made for such estimated losses, wherever necessary. Realized gains and losses on such contracts and interest costs in foreign currencies are accounted for at the time of settlement of the underlying transactions.

P. Taxes on Income :

Income Taxes are accounted for in accordance with Accounting Standard (AS 22) - "Accounting for Taxes on Income", as notified under the Companies (Accounting Standards) Rules, 2006. Income Tax comprises both current and deferred tax.

Current tax is measured on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

Provision for Fringe Benefits Tax is made in accordance with Chapter XII-H of the Income Tax Act, 1961. The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using the substantively enacted tax rates and tax regulations as of the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation.

Q. Earnings per Share:

The basic and diluted earnings per share (EPS) is computed by dividing Net Profit after tax for the year by weighted average number of equity shares outstanding during the year.

R. Leases :

i. Lease transactions entered into prior to 1st April, 2002 :

Lease rentals in respect of assets acquired under lease are charged to Statement of Profit & Loss.

ii. Lease transactions entered into on or after 1st April, 2002 :

(a) Assets acquired under lease where the Corporation has substantially all the risks and rewards incidental to ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

(b) Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors, are classified as operating leases. Lease rentals are charged to the Statement of Profit & Loss on accrual basis.

S. Amalgamation of Corporation''s wholly owned subsidiary, Electromags Automotive Products Private Limited (EAPL):

The Scheme of Amalgamation (''the Scheme'') of Electromags Automotive Products Private Limited (''the Amalgamating Company'') with the Corporation was sanctioned by the Hon''ble High Court of Judicature at Madras on 24th August, 2012. The Company has filed the certified copy of the Order with Registrar of Companies on 3rd September, 2012.

In accordance with the scheme, all assets and liabilities of the Amalgamating Company were transferred to and vested in the Corporation with effect from 1st April, 2011 (''The Appointed Date'') and recorded by the Company at their book values. The Scheme has accordingly been given effect to in these financial statements which include the assets and liabilities of the Amalgamating Company with effect from 1st April, 2011 and the results of operations for the year ended 31st March, 2012. In terms of the Scheme, the book value of assets and liabilities are required to be adopted as at 1st April, 2011.


Mar 31, 2012

A. Basis of Accounting

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with generally accepted accounting principles in India (GAAP) and in compliance with the applicable accounting standards and provisions of the Companies Act, 1956.

The preparation of financial statements in conformity with GAAP requires that the management of the Corporation makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference between actual results and estimates are recognized in the period in which the results are known/materialize.

This is the first year of application of the revised Schedule VI to the Companies Act, 1956 for the preparation of the financial statements of the Company. The revised Schedule VI introduces some significant conceptual changes as well as new disclosures. These include classification of all assets and liabilities' into current and non-current. The previous year figures have also undergone a major reclassification to comply with the requirements of the revised Schedule VI.

B. Method of Depreciation, Depletion and Amortization of Tangible Fixed Assets:

(i) Depreciation on Fixed Assets is provided on Straight Line basis except on assets of Sunmica Division other than Plant & Machinery, and Moulds and Dies of Weighing Products Division, at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on Fixed Assets of Sunmica Division other than Plant & Machinery is provided on written down value basis at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on Moulds and Dies of Weighing Products Division is provided on straight line basis at the rate of 20% based on the useful life as estimated by the Corporation.

(ii) Depreciation on revalued assets of Sunmica Division and South India Branches (Plantations) for the year has also been calculated on the revalued cost on the basis of their expected future life as estimated by the valuers. The difference between depreciation on revalued cost and original cost has been withdrawn from Revaluation Reserve and credited to Profit and Loss Account.

(iii) Cost of Leasehold Land is amortized over the period of lease.

(iv) Assets costing less than Rs 5000 are fully depreciated in the year of purchase.

C. Valuation of Tangible Fixed Assets:

(i) Fixed Assets are valued at cost of acquisition or construction. They are stated at historical costs or other amounts substituted for historical costs [vide note (ii) below]. In respect of new projects pre-operative expenses including financing costs attributable to the acquisition/construction of fixed assets (net of income during trial run) up to the date of commencement of commercial production is included in cost.

(ii) The Plant and Machinery of Sunmica Division, Electronics Division and South India Branches (Plantations) as on 30th September, 1985 other than additions during that year were revalued on the basis of the then present worth as per valuation made by the external valuers and are stated at revalued amounts. The resultant increase was credited to Revaluation Reserve.

(iii) Expenditure in respect of new crops including cost of development is capitalized until the year of maturity of the Plantation.

(iv) Fixed Assets held by non-integral foreign branches are stated at cost by converting at the closing rate of exchange at the balance sheet date.

D. Intangible Assets:

Intangible assets are recognized as per the criteria specified in Accounting Standard (AS 26) "Intangible Assets" as notified under the Companies (Accounting Standards) Rules, 2006 and amortized as follows:

(i) Technical Know How Fees

Technical knowhow fees for new product development is amortized over the period not exceeding five years, of agreement with supplier of technology.

(ii) Goodwill

Goodwill represents the excess of costs of business acquired over the fair market value of net tangible and identifiable intangible assets.

Goodwill is amortized proportionately over the period not exceeding five years from the date of acquisition of the business.

(iii) Computer Software

Computer software is amortized over the period not exceeding ten years based on the management's estimate of its useful life.

E. Impairment of Assets:

Management evaluates at regular intervals, using external and internal sources whether there is an impairment of any asset. Impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its net realizable value on eventual disposal. Any loss on account of impairment is expensed as the excess of the carrying amount over the higher of the asset's net realizable value or present value as determined.

F. Valuation of Investments:

(i) Long Term Investments are shown at cost. However, when there is a decline, other than temporary, in the value of a long term investment, the carrying amount is reduced to recognize the decline.

(ii) Current Investments are valued at cost or fair/market value whichever is lower.

(iii) Long Term Investments include investments in shares of companies registered outside India. They are stated at cost by converting at the rate of exchange prevalent at the time of acquisition thereof, except in case of investment by non-integral foreign branches. Investments made by such foreign branches, are stated at cost by converting at the closing rate of exchange at the balance sheet date.

G. Employee Benefits:

(a) Short term employee benefits:

Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

(b) Post-employment benefits:

(i) Provident and Family Pension Fund

The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which the Company make monthly contributions at a specified percentage of the employees' eligible salary (currently 12% of employees' eligible salary). Employees contribute a minimum of 12%, the excess being voluntary contribution.

The contributions are made to the provident fund managed by the trust set up by the Company or to the Regional Provident Fund Commissioner (RPFC) which are charged to the Statement of Profit and Loss as incurred. The schemes are considered as defined contribution plan.

(ii) Superannuation

The eligible employees of the Company are entitled to receive post employment benefits in respect of superannuation fund in which the Company makes annual contribution at a specified percentage of the employees' eligible salary. The contributions are made to the ICICI Prudential Life Insurance Co. Ltd.. Superannuation is classified as Defined Contribution Plan as the Company has no further obligations beyond making the contribution. The Company's contribution to Defined Contribution Plan is charged to Statement of Profit and Loss as incurred.

(iii) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees.

The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. The Company accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year. Actuarial gains and losses are recognised in the Statement of Profit and Loss.

(c) Other Long-Term Employee Benefits - Compensated Absences:

The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/ availment. The Company makes provision for compensated absences based on an independent actuarial valuation carried out at the end of the year. Actuarial gains and losses are recognized in the Statement of Profit and Loss.

H. Provisions, Contingent Liabilities And Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.

I. Valuation of Inventories:

(i) Stores and spare parts are valued at lower of cost or net realizable value. Cost is calculated on weighted average basis except in the case of Sunmica Division, where it is on First in First out basis.

(ii) Raw materials are valued at lower of cost or net realizable value. The cost includes purchase price as well as incidental expenses and is calculated on weighted average basis except in the case of Sun mica Division, where it is on First in First out basis.

(iii) Tea stock is valued at cost or net realizable value whichever is lower and inclusive of cess on excise duty. Timber, coffee, pepper and cardamom in stock are valued at since realized/ contracted rates or realizable value.

(iv) Work-in-progress is valued at cost or net realizable value whichever is lower. Cost is arrived on the basis of absorption costing.

(v) Manufactured finished goods of Sunmica Division, Weighing Products Division, Springs Division and Dental Products Division are valued at cost or net realizable value whichever is lower. Cost is determined on the basis of absorption costing including excise duty paid/provided on packed finished goods.

(vi) Traded Finished goods of Sunmica Division, Weighing Products Division, Springs Division and Dental Products Division are valued at cost or net realizable value whichever is lower.

(vii) Real Estate under development comprises of Freehold/Leasehold Land and Buildings at cost, converted from Fixed Assets into Stock-in-Trade and expenses related/attributable to the development/construction of the said properties. The same is valued at lower of cost or net realizable value.

J. Foreign Currency Transactions:

(i) Foreign Branches: (Non-integral operations)

(a) All assets and liabilities, both monetary and non-monetary are translated at the closing rate;

(b) Income and expense items are translated at the average rate prevailing during the year; and

(c) All resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment in the branch.

(ii) Other Transactions:

(a) Initial recognition:

Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion:

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(c) Exchange Differences:

Exchange differences arising on the settlement/conversion of monetary items are recognized as income or expense in the year in which they arise except in case of exchange differences in conversion of Long Term Monetary Items. Exchange differences arising on conversion of Long Term Monetary Items are accounted in "Foreign Currency Monetary Item Translation Difference Account" to be amortized up to 31st March, 2011.

The premium or discount arising at the inception of forward exchange contracts is amortized as expenses or income over the life of the respective contracts. The difference between yearend conversion rate and rate on the date of contract is recognized as exchange difference. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change except for exchange difference in respect of contracts relating to Long Term Monetary Items which are amortized up to 31st March, 2011 or date of expiry of contract, whichever is earlier. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or expense for the year.

K. Export Benefits/Incentives:

Export benefits/incentives in respect of import duty benefits under DEPB scheme are accounted on accrual basis on the basis of exports made under DEPB scheme.

L. Revenue. Recognition:

(i) Revenue in respect of insurance/other claims, interest etc., is recognized only when it is reasonably certain that the ultimate collection will be made.

(ii) Sale of products is recognized when the risks and rewards of ownership are passed on to the customers and no significant uncertainty as to its measurability and collectability exists.

(iii) Sale of timber is accounted based on sale agreement/sale in auction.

(iv) Sale of pepper is accounted based on confirmed contract of sale.

(v) Dividend income is accounted when the right to receive payment is established and known. Interest income is recognized on the time proportion basis.

M. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalized up to the date when such assets are ready for its intended use and all other borrowing costs are recognized as an expense in the period in which they are incurred.

N. Segment Accounting Policies:

(a) Segment assets and liabilities:

All Segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment assets and liabilities do not include inter-corporate deposits, share capital, reserves and surplus, borrowings, and income tax (both current and deferred).

(b) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to segment. It does not include interest income on inter-corporate deposits, interest expense and income tax.

O. Financial Derivatives and commodity hedging transactions:

Outstanding derivative contracts are not marked to market at each balance sheet date. The Corporation assesses the foreseeable losses in respect of such contracts and provision is made for such estimated losses, wherever necessary. Realized gains and losses on such contracts and interest costs in foreign currencies are accounted for at the time of settlement of the underlying transactions.

p. Taxes on Income:

Income Taxes are accounted for in accordance with Accounting Standard (AS 22) - "Accounting for Taxes on Income", as notified under the Companies (Accounting Standards) Rules, 2006. Income Tax comprises both current and deferred tax.

Current tax is measured on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

Provision for Fringe Benefits Tax is made in accordance with Chapter Xll-H of the Income Tax Act, 1961.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using the substantively enacted tax rates and tax regulations as of the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognized, only if there is virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realization.

Q. Earnings per Share:

The basic and diluted earnings per share (EPS) is computed by dividing Net Profit after tax for the year by weighted average number of equity shares outstanding during the year.

R. Leases: ,

(i) Lease transactions entered into prior to 1st April, 2002:

Lease rentals in respect of assets acquired under lease are charged to Statement of Profit 8 Loss.

(ii) Lease transactions entered into on or after 1st April, 2002:

(a) Assets acquired under lease where the Corporation has substantially all the risks and rewards incidental to ownership are classified as finance leases. Such assets are capitalized at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

(b) Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors, are classified as operating leases. Lease rentals are charged to the Statement of Profit & Loss on accrual basis.


Mar 31, 2010

A. Basis of Accounting

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with generally accepted accounting principles in India (GAAP) and in compliance with the applicable accounting standards and provisions of the Companies Act, 1956.

The preparation of financial statements in conformity with GAAP requires that the management of the Corporation makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference between actual results and estimates are recognised in the period in which the results are known/materialise.

B. Method of Depreciation, Depletion and Amortisation of Tangible Fixed Assets:

(i) Depreciation on Fixed Assets is provided on Straight Line basis except on assets of Sunmica Division other than Plant & Machinery, and Moulds and Dies of Weighing Products Division, at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on Fixed Assets of Sunmica Division other than Plant & Machinery is provided on written down value basis at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on Moulds and Dies of Weighing Products Division is provided on straight line basis at the rate of 20% based on the useful life as estimated by the Corporation.

(ii) Depreciation on revalued assets of Sunmica Division and South India Branches (Plantations) for the year has also been calculated on the revalued cost on the basis of their expected future life as estimated by the valuers. The difference between depreciation on revalued cost and original cost has been withdrawn from Revaluation Reserve and credited to Profit and Loss Account.

(iii) Cost of Leasehold Land is amortised over the period of lease.

(iv) Assets costing less than Rs. 5000 are fully depreciated in the year of purchase.

C. Valuation of Tangible Fixed Assets:

(i) Fixed Assets are valued at cost of acquisition or construction. They are stated at historical costs or other amounts substituted for historical costs (vide note (ii) below). In respect of new projects pre-operative expenses including financing costs attributable to the acquisition/construction of fixed assets (net of income during trial run) upto the date of commencement of commercial production is included in cost.

(ii) The Plant and Machinery of Sunmica Division, Electronics Division and South India Branches (Plantations) as on 30th September, 1985 other than additions during that year were revalued on the basis of the then present worth as per valuation made by the external valuers and are stated at revalued amounts. The resultant increase was credited to Revaluation Reserve.

(iii) Expenditure in respect of new crops including cost of development is capitalised until the year of maturity of the Plantation.

(iv) Fixed Assets held by non-integral foreign branches are stated at cost by converting at the closing rate of exchange at the balance sheet date.

D. Intangible Assets:

Intangible assets are recognised as per the criteria specified in Accounting Standard (AS - 26) "Intangible Assets" as notified under the Companies (Accounting Standards) Rules, 2006 and amortised as follows:

(i) Technical Know How Fees

Technical know how fees for new product development is amortised over the period not exceeding five years, of agreement with supplier of technology.

(ii) Goodwill

Goodwill represents the excess of costs of business acquired over the fair market value of net tangible and identifiable intangible assets.

Goodwill is amortised proportionately over the period not exceeding five years from the date of acquisition of the business.

(iii) Computer Software

Computer software is amortised over the period not exceeding ten years based on the managements estimate of its useful life.

E. Impairment of Assets:

Management evaluates at regular intervals, using external and internal sources whether there is an impairment of any asset. Impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its net realisable value on eventual disposal. Any loss on account of impairment is expensed as the excess of the carrying amount over the higher of the assets net realisable value or present value as determined.

F. Valuation of Investments:

(i) Long Term Investments are shown at cost. However, when there is a decline, other than temporary, in the value of a long term investment, the carrying amount is reduced to recognise the decline.

(ii) Current Investments are valued at cost or fair/market value whichever is lower.

(iii) Long Term Investments include investments in shares of companies registered outside India. They are stated at cost by converting at the rate of exchange prevalent at the time of acquisition thereof, except in case of investment by non-integral foreign branches. Investments made by such foreign branches, are stated at cost by converting at the closing rate of exchange at the balance sheet date.

G. Employee Benefits:

(i) The Corporation contributes to Government provident fund as required by the statute, which is a defined contribution plan. The same is charged to Profit and Loss account.

The Corporation contributes to recognized provident fund as required under the rules in respect of few employees. This is a defined benefit plan and the contribution is charged to Profit and Loss account.

(ii) The amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period when the employee renders the service. These benefits include performance incentives and compensated absences.

(iii) Gratuity contribution made to gratuity fund on the basis of actuarial valuation, using projected unit credit method carried out as at the end of the year, is charged to revenue. Actuarial gains/ losses are immediately taken to the profit and loss account.

(iv) Superannuation Fund is a defined contribution scheme and contribution is made to approved Superannuation Fund in respect of eligible employees as required under the rules and is recognized as an expense in the year in which it is incurred.

H. Provisions, Contingent Liabilities And Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.

I. Valuation of Inventories:

(i) Stores and spare parts are valued at lower of cost or net realisable value. Cost is calculated on weighted average basis except in the case of Sunmica Division, where it is on First in First out basis.

(ii) Raw materials are valued at lower of cost or net ealisable value. The cost includes purchase price as well as incidental expenses and is calculated on weighted average basis except in the case of Sunmica Division, where it is on First in First out basis.


(iv) Work-in-progress is valued at cost or net realisable value whichever is lower. Cost is arrived on the basis of absorption costing. (v) Manufactured finished goods of Sunmica Division, Weighing Products Division, Springs Division and Dental Products Division are valued at cost or net realisable value whichever is lower. Cost is determined on the basis of absorption costing including excise duty paid/provided on packed finished goods.

(vi) Traded Finished goods of Sunmica Division, Weighing Products Division, Springs Division and Dental Products Division are valued at cost or net realisable value whichever is lower.

(vii) Real Estate under development comprises of Freehold/Leasehold Land and Buildings at cost, converted from Fixed Assets into Stock-in - Trade and expenses related/attributable to the development/construction of the said properties. The same is valued at lower of cost or net realizable value.

J. Foreign Currency Transactions:

(i) Foreign Branches: (Non-integral operations)

(a) All assets and liabilities, both monetary and non-monetary are translated at the closing rate;

(b) Income and expense items are translated at the average rate prevailing during the year; and

(c) All resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment in the branch.

(ii) Other Transactions:

(a) Initial recognition:

Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(b) Conversion:

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

(c) Exchange Differences :

Exchange differences arising on the settlement/conversion of monetary items are recognised as income or expense in the year in which they arise except in case of exchange differences in conversion of Long Term Monetary Items. Exchange differences arising on conversion of Long Term Monetary Items are accounted in "Foreign Currency Monetary Item Translation Difference Account" to be amortised upto 31st March, 2011. The premium or discount arising at the inception of forward exchange contracts is amortised as expenses or income over the life of the respective contracts. The difference between year end conversion rate and rate on the date of contract is recognized as exchange difference. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change except for exchange difference in respect of contracts relating to Long Term Monetary Items which are amortised upto 31st March, 2011 or date of expiry of contract, whichever is earlier. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the year.

K. Export Benefits/Incentives:

Export benefits/incentives in respect of import duty benefits under DEPB scheme are accounted on accrual basis on the basis of exports made under DEPB scheme.

L. Revenue Recognition:

(i) Revenue in respect of insurance/other claims, interest etc., is recognised only when it is reasonably certain that the ultimate collection will be made.

(ii) Sale of products is recognised when the risks and rewards of ownership are passed on to the customers and no significant uncertainty as to its measurability and collectability exists.

(iii) Sale of timber is accounted based on sale agreement/sale in auction. (iv) Sale of pepper is accounted based on confirmed contract of sale.

M. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalised up to the date when such assets are ready for its intended use and all other borrowing costs are recognised as an expense in the period in which they are incurred.

N. Segment Accounting Policies:

(a) Segment assets and liabilities:

All Segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment assets and liabilities do not include inter-corporate deposits, share capital, reserves and surplus, borrowings, and income tax (both current and deferred).

(b) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to segment. It does not include interest income on inter-corporate deposits, interest expense and income tax.

O. Financial Derivatives and commodity hedging transactions:

Outstanding derivative contracts are not marked to market at each balance sheet date. The Corporation assesses the foreseeable losses in respect of such contracts and provision is made for such estimated losses, wherever necessary. Realized gains and losses on such contracts and interest costs in foreign currencies are accounted for at the time of settlement of the underlying transactions.

P. Taxes on Income:

Income Taxes are accounted for in accordance with Accounting Standard (AS - 22) - "Accounting for Taxes on Income", as notified under the Companies (Accounting Standards) Rules, 2006. Income

Tax comprises both current and deferred tax.

Current tax is measured on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

Provision for Fringe Benefits Tax is made in accordance with Chapter XII-H of the Income Tax Act, 1961.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using the substantively enacted tax rates and tax regulations as of the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation.

Q. Leases:

i. Lease transactions entered into prior to 1st April, 2002:

Lease rentals in respect of assets acquired under lease are charged to Profit & Loss Account. ii. Lease transactions entered into on or after 1st April, 2002:

(a) Assets acquired under lease where the Corporation has substantially all the risks and rewards incidental to ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

(b) Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors, are classified as operating leases. Lease rentals are charged to the Profit & Loss Account on accrual basis.

 
Subscribe now to get personal finance updates in your inbox!